If you are eligible to withdraw from your KiwiSaver Account to buy your first home, you may also be eligible for the HomeStart Grant (previously known as KiwiSaver first home subsidy). The HomeStart Grant is administered by Housing New Zealand, outside KiwiSaver. This article looks at the rules for the HomeStart Grant. For more information see the checklist on Housing New Zealand’s website.
To be eligible for the HomeStart Grant you must be a member of a KiwiSaver scheme, or a complying superannuation fund, or exempt employer scheme, be 18 years or over, and have not received a HomeStart Grant or a KiwiSaver withdrawal before.
You must have contributed at least the minimum percentage of your income to a KiwiSaver scheme, complying superannuation fund or exempt employer scheme for at least three years. The three years do not have to be consecutive. From 1 July 2007 to 31 March 2009 the minimum contribution was 4% of your income for employees, 4% of the minimum wage for non-earners and 4% of the yearly benefit for beneficiaries. Between 1 April 2009 and 31 March 2013, the minimum contribution was reduced to 2% and from 1 April 2013, the minimum 2% contribution was increased to 3%.
There are some other rules:
- The HomeStart Grant is for first home buyers. However, you may still qualify if you can show that you are in the same financial position as a first home buyer, in terms of income and assets. To qualify you must not have realisable assets totaling more than 20 percent of the defined house price cap for the area you are buying in. You must apply to Housing New Zealand for a determination that you are in the same position as a first home buyer.
- The HomeStart Grant can be used to buy an older/existing home, land to build a house on, or to build on Maori land, or buy a property off the plans or buy an apartment that is being built. You must be planning to live in it, and must not currently own any other property.
- You must have a household annual income of $85,000 or less (before tax) if you are an individual buyer or a combined $130,000 or less (before tax) for two or more buyers.
- You must be buying a house under the maximum house price caps. The house price caps are:
- $650,000 (new properties) $600,000 (existing/older properties) for Auckland;
- $550,000 (new properties) $500,000 (existing/older properties) for Christchurch City, Hamilton City, Hutt City, Kapiti Coast, Porirua City, Queenstown Lakes District, Selwyn District, Tasman/Nelson, Tauranga City, Upper Hutt, Waimakariri, Western Bay of Plenty and Wellington City;
- $450,000 (new properties) $400,000 (existing/older properties) for the rest of New Zealand.
- If you are buying land and planning to build a house on it, or buying an apartment that is being built, you also need to meet the following criteria:
- On completion of construction and issuance of the Code Compliance Certificate to live in the house or apartment for at least six months from the settlement date;
- Have the house built within the timeframes stated in the building contract you have signed and to supply to Housing New Zealand a copy of the Code Compliance Certificate to show that this has been done;
- Be able to show, if you are building on land or buying an apartment being built, that:
- You will have funding for the construction of the building
- The total cost of both the land and the house or apartment is within the relevant regional house price caps
- The land or site is ready to build on.
- You must have access to assets that is 10 percent or more of the purchase price and is not borrowed or secured against other property or borrowing. (The 10 percent deposit includes the money you can withdraw through the KiwiSaver first-home withdrawal feature, the HomeStart grant amount you or the other purchasers may be eligible for and any other funds, such as savings, fixed and term deposits or funds already paid to a real estate agent or solicitor.
For an existing house that you want to buy, the HomeStart Grant is $1,000 for each year you've been contributing to the relevant scheme, up to a maximum of $5,000 after five years of saving. For a new house, the HomeStart Grant is $2,000 for each year you have been contributing to the relevant scheme, up to a maximum of $10,000 after five years of saving. Note, the test is both length of membership of the KiwiSaver scheme, or complying superannuation fund, or exempt employer scheme, and whether you have been contributing the required contributions over a minimum of three years.
To apply for a HomeStart Grant
You can apply for a pre-approval if you have not found a house or land to build on, but want to find out if you are eligible before you start house/land hunting. Otherwise, you can apply for the HomeStart Grant directly if you already have found a house/land, and have a sale and purchase agreement.
Application forms are available on the Housing New Zealand website, www.hnzc.co.nz. Complete the form and return with the required documents (listed in the application form) to Housing New Zealand.
Housing New Zealand will require the following details:
Proof of earnings for the past 12 months
Proof of earnings is required from the applicant and for all other people purchasing the property.
If employed, you must provide a certificate of earnings from the IRD or a letter from your employer and your two most recent pay slips, clearly showing how much you have earned in the previous 12 months and how long you have been employed. Income also includes:
- Work and Income benefits. You will need evidence from Work & Income
- Overtime and shift allowances
- Second job and casual employment. Additional letters from the employees and payslips are required.
- ACC payments and private insurance payments, such as income protection — evidence provided by ACC statements.
If self-employed, you are required to provide:
- Your most recent financial statements, supported by business and personal tax returns. These should show the percentage of income contributed annually to your KiwiSaver scheme.
- Up to date interim financial statements if the end of the last financial year is more than six months ago.
Proof of contributions to your KiwiSaver scheme (or other qualifying scheme)
This can include payment records from your scheme provider, letter from your employers, or financial statements showing the percent of income contributed (if self employed). If you don’t have these records, you can obtain them from your scheme provider or from the IRD website “manage my KiwiSaver”.
Photocopy of passport or birth certificate.
Sale and purchase agreement of the house or land you are buying
This is required if you have made an offer to purchase and now require the first home subsidy. You will require a witness when signing the application form unless you have pre-approval.
FAQs - HomeStart Grant
Can I get the HomeStart Grant if I am self-employed and in KiwiSaver?
Yes. If you are self employed, you will qualify for the first home subsidy, provided you make at least one contribution annually of at least the minimum percentage of your income over the qualifying period (3, 4 or 5 years) and meet the other requirements.
Can I get the HomeStart Grant if I am not employed but in KiwiSaver?
Yes. You will qualify for the HomeStart Grant if you make an annual contribution that is at least the minimum percentage of the adult minimum wage (currently $660), over the qualifying period (3, 4 or 5 years) and meet all other eligibility criteria.
Can I get the HomeStart Grant if I am a beneficiary and in KiwiSaver?
Yes. Provided you make an annual contribution that is at least the minimum percentage of your gross benefit and meet all the other eligibility criteria
I work part-time for a couple of different employers. I have joined KiwiSaver with one of them. Can I still get the HomeStart Grant?
You will qualify for the HomeStart Grant if you have contributed the minimum percentage of your income for three years (does not need to be consecutive). You will also need to meet other conditions around income and house price. If you are contributing through only one employer, you must still ensure that you contribute through that employer and by voluntary savings, the minimum percent of your total income from all employers.
Is there a minimum age for the HomeStart Grant?
Yes, the HomeStart Grant is only available to individuals aged 18 years and above. However, contributions to your KiwiSaver account before you turn 18 will count towards your eligibility for the HomeStart Grant as long as they meet the minimum contribution requirements.
How does being on a contributions holiday affect my eligibility for the HomeStart Grant?
You must have been contributing to KiwiSaver for a minimum of three years, to be eligible for the HomeStart Grant. The three years do not have to be consecutive. For example, if you take a six month savings suspension you will be eligible for the minimum HomeStart Grant after three-and-a-half years (i.e. the length of your savings suspension is added to the minimum three years of contributions). You would be eligible for the maximum HomeStart Grant after five-and-a-half years of contributing to KiwiSaver.
Does the subsidy have to be repaid?
Not if you live in the house that you bought using the HomeStart Grant for at least six months. If you don’t live in the house for at least six months, the HomeStart Grant must be paid back and penalties will apply.
What is the minimum contributions percentage?
Between 1 July 2007 and 31 March 2009 the minimum contribution was 4 percent. Between 1 April 2009 and 31 March 2013, the minimum contribution was 2 percent. From 1 April 2013, it became 3%.
How much is the HomeStart Grant?
To purchase an exisiting house the HomeStart Grant is $1,000 for each year you have saved, to a maximum of $5,000. For a new house the HomeStart Grant is $2,000 for each year you have saved to the maximum of $10,000. This applies separately for each person buying the house for up to 3 people.